TFI International announced the acquisition of less-than-truckload carrier Hercules Forwarding Monday after the market closed.
Hercules operates a 31-terminal network throughout the U.S. and Canada, focusing on intra-U.S. and U.S.-to-Canada shipments. The company has more than 210 trucks, nearly 600 trailers and approximately 75 containers, generating revenue of more than $100 million annually.
The nearly 40-year-old company has two headquarters: Vernon, California, and New Westminster, British Columbia. It’s a nonunion carrier serving numerous sectors, such as retail, construction, automotive, and food and beverage, as well as 3PLs.
TFI’s U.S. LTL company, TForce Freight, is represented by the Teamsters union.
Financial terms of the transaction were not provided.
“This bolt-on acquisition fortifies our US LTL portfolio while adding cross-border LTL into Canada, creating a partner for our Canada-to-US shipments while offering synergy opportunities on both sides of the border,” said Alain Bédard, chairman, president and CEO at TFI.
Montreal-based TFI (NYSE: TFII) said late last year it was contemplating a spinoff of its specialized truckload business, following the $1.1 billion acquisition of Daseke (NASDAQ: DSKE), which is an acquisition rollup of flatbed carriers. That deal is expected to close in the second quarter.
That would leave the company’s U.S. LTL operations, which include the 2021 acquisition of UPS Freight, as well as its Canadian LTL network, the package and courier business, and logistics units under the TFI name. The combined entity generated $7.5 billion in revenue during 2023.
The Daseke deal will double the company’s TL revenue to $3.6 billion.
After posting a 91% operating ratio (operating expenses expressed as a percentage of revenue) in its U.S. LTL business during the fourth quarter, the worst among the publicly traded LTLs, TFI said a turnaround effort at the unit would allow it to lower the OR to 88% this year. Lapping recent cost headwinds and onboarding a freight mix favoring heavier industrial shipments is expected to produce the result.
Longer term, management said the business can achieve a low-80% OR, which would be more in line with peers.
“Hercules’ impressively low claims ratio and skill at serving multiple premium freight markets moving high-value cargo across the US and Canada aligns well with our focus and operating philosophy,” Bédard said Monday.
A year ago, it appeared that fellow union LTL carrier ABF Freight, a subsidiary of ArcBest (NASDAQ: ARCB), was an acquisition target of TFI when it was revealed that TFI held a 4% equity stake in the company. That appears less likely now, at least in the near term, given TFI’s recent acquisition activity.
More FreightWaves articles by Todd Maiden
February brings slight relief to freight cycle’s ‘long bottom,’ Cass says
ArcBest again swaps freight for better yields in February
XPO provides favorable February update
The post TFI acquires LTL carrier Hercules Forwarding appeared first on FreightWaves.
